The stock market is developing a case of the jitters as we move closer to Labor Day.
A series of weaker-than-expected economic reports, coupled with developments in Syria, have investors a little jumpy this week. Of course, the specter of taper is still looming over the market with the only question being when (not if) the Fed will slow the pace of bond purchases.
After Labor Day, I think we will see the market advance continue to thin out with more news-related volatility. Investors need to take refuge in the very best stocks as the market becomes much more selective between now and the end of the year. Fortunately, we have Portfolio Grader to help find those places of refuge.
One of the best sectors with the likelihood of extremely positive upside performance is the regional and community bank sector. This group of smaller banks is in the early stages of what should be a long-term recovery in the aftermath of the credit and real estate crisis. Their credit problems are fading into the past as problem loans have ether ben charged off or restructured.
Regional banks are one of the few groups that could get a real boost from tapering and higher interest rates as a steeper yield curve will boost their net interest margins. Remember that even if they slow or stop bond purchases, the Fed is still going to keep short-term rates low until at least 2015, and that is great news for community banks.
BNC Bancorp (BNCN) is located in High Point, North Carolina and has 35 branches in its home state and South Carolina. The company just reported spectacular earnings, rising by 144% on a year-over-year basis. The bank has been buying smaller competitors to raise its assets and earning potential, and the strategy is working very nicely so far. BNC has taken advantage of the weakness in the banking sector to acquire 7 smaller banks so far and plans to continue to expand its footprint. The strong growth has been reflected in Portfolio Grader and the stock was upgraded to a “strong buy” in July.
Many of the regional and community banks have been upgraded in the past few months to “buys” and “strong buys” in Portfolio Grader. Investors looking for profit potential outside of the headlines should use the stock-picking tool to find those banks with the most potential for the rest of the year and into 2014.
Louis Navellier is the editor of Blue Chip Growth.